SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 2003
ACE LIMITED
(Exact name of registrant as specified in its charter)
Cayman Islands 1-11778 98-0091805
(State or other jurisdiction (Commission (I.R.S. Employer of Incorporation)
File Number) Identification No.)
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton, Bermuda HM 08
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (441) 295-5200
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Information
On January 27, 2003, ACE Limited (the "Company") issued a press
release announcing that it would strengthen the Company's asbestos reserves
resulting in a $354 Million net after-tax charge to fourth quarter 2002
earnings. A copy of the press release is attached as Exhibit 99.1 to this
Report.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit
Number Description
- ------- -----------
99.1 Press release, dated January 27, 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: January 28, 2003 ACE LIMITED
By: /s/ Robert Blee
-----------------------
Robert Blee
Chief Accounting Officer
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99.1 Press release, dated January 27, 2003
Exhibit 99.1
ACE LIMITED TO STRENGTHEN ASBESTOS RESERVES:
WILL RESULT IN $354 MILLION NET AFTER-TAX CHARGE TO FOURTH QUARTER EARNINGS
COMPANY PROVIDES UPDATED GUIDANCE WITH RESPECT TO THE FOURTH QUARTER
HAMILTON, Bermuda--Jan. 27, 2003--ACE Limited (NYSE:ACE) reported today
that it will incur a net, after-tax charge to earnings of $354 million in
the fourth quarter of 2002.
This decision follows an extensive internal review of its asbestos and
environmental reserves, as well as a regular biennial reserve review by an
internationally-known actuarial consulting firm required by the
Pennsylvania Insurance Department as part of the acquisition of CIGNA's
property and casualty operations in 1999.
ACE will conduct a conference call to discuss this charge on Monday,
January 27, 2003, at 10:00 a.m. Eastern Time. Presentation materials will
be available on the ACE Limited web site. ACE Limited will host a live
webcast of this conference call beginning at 10:00 a.m. Eastern Time. The
public may access the webcast, available on a listen only basis, at
www.acelimited.com. Please refer to our website, one half-hour before the
call, for further log-in details. A replay of the webcast will be available
from Monday, January 27, 2003, until Monday, February 10, 2003, 5:00 p.m.
Eastern Time.
ACE said that the gross reserve increase of $2.178 billion is offset by
$1.860 billion of reinsurance, including $533 million from the reinsurance
agreement from National Indemnity Company, a subsidiary of Berkshire
Hathaway. After an addition to our bad debt provision of $145 million, ten
percent participation in the National Indemnity reinsurance cover, and a
tax benefit of $162 million, ACE will record a net after-tax charge of $354
million in the fourth quarter ($1.32 per share).
"ACE's total asbestos reserves are now at the high end of the range
calculated by our internal analysis and are consistent with the actuarial
consulting firm's best estimate," said Brian Duperreault, ACE Limited
Chairman and Chief Executive Officer. "While we believe that there are
favorable trends in the judicial environment regarding our asbestos
liabilities, the reserve strengthening reflects a more conservative view
and assumes that there will be no such future improvements."
ACE also provided updated guidance for the fourth quarter 2002,
excluding the above charge:
-- Estimated operating income of $0.92 per share
-- Estimated net income of $0.67 per share
-- Unrealized gains in the fourth quarter of approximately $150
million (after-tax)
-- Estimated shareholder equity as of 12/31/02 -- $6.7 billion
-- Estimated operating cash flow in the fourth quarter in excess
of $800 million
ACE will report the full details of its fourth quarter results on
February 5, 2003 followed by a webcast conference call on February 6th at
8:30 a.m. Eastern Time.
The ACE Group of Companies provides insurance and reinsurance for a
diverse group of clients. The ACE Group conducts its business on a global
basis with operating subsidiaries in nearly 50 countries. Additional
information can be found at: www.acelimited.com.
Application of the Safe Harbor of the Private Securities Litigation
Reform Act of 1995:
Any forward-looking statements made in this press release reflect the
Company's current views with respect to future events and financial
performance and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such statements involve
risks and uncertainties which may cause actual results to differ materially
from those set forth in these statements. For example, the Company's
forward-looking statements concerning the sufficiency of its asbestos
reserves is subject to a number of potential adverse developments
including, among others, the willingness of parties, including the Company,
to settle disputes, the impact of aggregate policy coverage limits, the
impact of bankruptcies of various asbestos producers and related businesses
and new theories of liability. The Company's forward-looking statements
could also be affected by judicial and legislative developments, litigation
tactics, investment market developments ,competition, changes in demand,
pricing and policy term trends, the levels of new and renewal business
achieved, market acceptance, the frequency of unpredictable catastrophic
events, actual loss experience, uncertainties in the reserving and
settlement processes, the amount and timing of reinsurance recoverables,
possible terrorism or the outbreak of war and economic, political,
regulatory, insurance and reinsurance business conditions, as well as
management's response to these factors, and other factors identified in the
Company's filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the dates on which they are made. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
CONTACT: ACE Limited
Helen M. Wilson, 441/299-9283 (Investors)
Wendy Davis Johnson, 441/299-9347 (Media)